Just over a year ago, Kentucky began a statewide Medicaid managed care program under which three private organizations provide health coverage for approximately 560,000 Medicaid patients. Because of a significant budget shortfall in the Medicaid program, the state moved quickly to implement the program through managed care organizations, known as MCOs.
The managed care program was intended to help the state save money while ensuring patients receive the quality care they need. Kentucky's hospitals, as essential care providers for Kentuckians in every region, have been on the front lines as this new system has been implemented. Our primary interest, of course, is patient care, and we also contribute to the economic well-being of communities throughout the state.
Our concern, however, is that patient health, hospitals and the communities they serve are threatened by a number of serious problems that have emerged in the months since the statewide Medicaid managed care system took effect.
Hospitals' close monitoring of the new system has documented the following significant issues:
Medicaid patients are being inappropriately denied coverage for emergency care, inpatient psychiatric care and other critical behavioral health services;
Patients are being referred to outpatient services that do not exist in their areas by out-of-state MCO reviewers who know little about available resources in Kentucky;
Hospitals are being denied payment for emergency room services as MCOs second-guess physicians and their treatment choices for patients;
Provider networks are inadequate. Contract cancellations by MCOs with multiple hospitals have left patients in large parts of the state, particularly in Eastern Kentucky, without ready access to such critical services as maternity care, radiation therapy and adult and child psychiatric care. Patients and their families are forced to travel hours from home to receive care;
MCOs frequently are not paying hospitals on time as required by state law — with payments taking more than a year in some cases — placing a significant financial strain on hospitals and forcing some to lay off employees;
The state Medicaid department has taken no significant action to enforce its contracts with MCOs to address these issues, leaving Kentucky Medicaid patients and health providers to fend for themselves.
Kentucky hospitals are not the only source of documentation of these problems. A report by the nationally respected Urban Institute validated many of the same concerns. Among the issues cited in that November, 2012 report:
Changing provider networks;
Patients having difficulty maintaining continuity of needed prescription medications;
Administrative difficulties that include authorization delays and claim denials;
The fact that the state's oversight of Medicaid managed care is "still developing."
Medicaid managed care has the potential to improve services and lower costs, but not if patients are struggling to gain access to needed care and providers are fighting to be paid for the care they have given patients.
Action is needed to address the problems that patients and hospitals are experiencing with Medicaid managed care and to make the system work properly. And with the possibility that Medicaid will be expanded in Kentucky to include an additional 350,000 people, it is critical that these issues be addressed right away to avoid even greater problems in the future.
State laws must be strengthened to ensure the Medicaid managed care system works for the benefit of patients, providers and taxpayers.
In addition, although managed care organizations essentially operate like private insurance companies, they are not subject to the same consumer protections that state law applies to private insurers. Strengthening consumer protections for Medicaid patients will ensure the organizations play by the same rules as all insurance companies that serve the public.
Making the managed care system work in the best possible way for Kentucky should be the shared goal of providers, state government and the MCOs themselves. We can achieve this goal by taking the right steps — right away.